The Strategic Role of Organizational Learning in Creating Competitive Advantage: A Review of Literature2007IntroductionWith the growth of information technology and the new economy, concepts like organizational learning, knowledge management, knowledge economy and learning organization are increasingly becoming commonplace in management literature. Especially in the sphere of information technology and other knowledge-intensive industries, intellectual capital rather than other scarce resources like physical capital and labor, has come to be the crucial determinant of creating competitive advantage for the organization. Hence, the stress has moved from the distribution of a given set of scarce resources, typically labor and physical and financial capital, to the creation, allocation and distribution of scarce resources like knowledge.
The process of knowledge creation and distribution, however, is socially determined and dependent on the interactivity of the institutional framework in which the organization operates. The literature on organization emphasizes on the cognitive processes within the organization as well as the interaction with rules and routines of related organizations. In this paper, I will review the academic literature on different categories of organizational knowledge, the difference between organizational learning and learning organization, knowledge management and the effect of organizational learning on competitive advantage.
Finally, I will review the gaps in academic literature and recommend some new lines of research. The purpose of this paper is to link the theoretical and methodological literature in order to create a guideline for the development of competitive advantage of an organization. Organizational knowledge In the literature on knowledge management and organizational learning, knowledge is seen as the crucial parameter that leads to competitive advantage. Drucker said in his seminal work in 1964, said “What does make a business distinct and what is its peculiar resource is its ability to use knowledge to social, economic and managerial advantage” (quoted in Blackman and Henderson, 2002).
An organization that strives for continuous acquisition, management and distribution of knowledge is typically called the learning organization. According to Garvin (1993), “a learning organization is an organization skilled at creating, acquiring and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights (p 80, quoted in Blackman & Henderson). However, an organization can create competitive knowledge through the learning process only if knowledge exists and can be identified.
There is a huge body of literature on the knowledge and learning, ranging from quantitative models on how organizations can create, manage and disseminate knowledge to those analyzing the epistemological roots of the relevant terms (reviewed in Easterby-Smith and Lyles, 2003). Typically, organizational knowledge is categorized according to 1) ‘know what’ comprising data and information, 2) ‘know how’ comprising procedures, 3) ‘know why’ comprising understanding and wisdom and 4) ‘know who’ comprising the persons who are depositories of particular knowledge (Ackoff, 1989 cited in Krohwinkel-Karlsson).
In addition, Caryannis (1999, cited in Krohwinkel-Karlsson) also included ‘knowing what you know’ and ‘not knowing what you know’ as elements that needs to be analyzed more closely by the management. The difference between knowing what knowledge one has and not knowing so is all the more enlarged by the fact that organizational knowledge may be explicit – when key knowledge is documented and shared formally – or tacit – when knowledge is embedded in personal experience and skills of individuals. Tacit knowledge requires a socialization process for the acquisition, management and dissemination to be effective.
Nonaka and Tekeuchi (1995, quoted in Krohwinkel-Karlsson) finds that in order to form a “knowledge-creating company”, various elements like the national and organizational culture regarding communication processes and an effective dialogue between policy-makers and those involved in the operation process are crucial. Besides, it is often difficult to distinguish between explicit and tacit knowledge.